As we said, we have heard from all the major stakeholders - except the policyholders. We are not talking about the rich, who typically self-insure (they can afford to pay their medical bills if and when incurred). The people who buy insurance are primarily the middle class and possibly, some lower-income households. Their main objective - for peace of mind should the unfortunate (illness, accident, disability, death) happen.
News of a 40%-70% increase in medical insurance premiums in late 2024 triggered a public uproar from aggrieved policyholders suddenly slapped with steep hikes in their premium bills. It sparked a nationwide debate on why and who is to blame. Since then, we have heard from almost all the major stakeholders, including government officials, Bank Negara Malaysia (regulator of the insurance industry), the Association of Private Hospitals Malaysia (APHM) and the big insurance companies. Not surprisingly, each has inevitably pointed the finger at one another. Private hospitals highlight the significantly higher profit margins for the insurance companies - pre-tax profit margins of 17%-18% versus their own PBT margin of 13%-14%. Insurers accuse hospitals of overtreatment and inflated pricing for unregulated hospital supplies and services, leading to sharply higher medical claims and payouts. And both private hospitals and insurers shift the blame to global medical cost inflation, increased number of claims post-Covid-19, and the patients themselves, for exhibiting "buffet syndrome".
Having heard and read from all parties, we believe there is some truth in all of the above claims. A number of mitigation strategies have since been proposed, including the implementation of a DRG (Diagnosis-Related Group) system, publication of retail drug prices and cost ranges for common healthcare services; monitoring and publishing key medical inflation measures; greater transparency on billing; enhancing interoperability of electronic medical records to reduce duplication of diagnostic tests, and so on. But the bottom line remains unchanged - policyholders will have to accept sharply higher premiums, effectively a hike of some 30% to be spread out over three years (2024-2026), following discussions with Bank Negara.
